EU Approves $113 Billion Bailout for Ireland

EU governments on Sunday approved an €85 billion ($113 billion) bailout deal for Ireland to help the debt-struck nation withstand the weight of its banking crisis.

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Ireland and European Union

According to a statement released by the Irish government, the country will take €10 billion immediately to boost the capital reserves of its banks. Another €25 billion earmarked for the banks will remain in reserve.

The Irish government's public finances will receive €50 billion, to be drawn upon as necessary.

"It provides Ireland with vital time and space to successfully and conclusively address the unprecedented problems that we've been dealing with since this global economic crisis began," said Irish Prime Minister Brian Cowen at a press conference in Dublin.

The statement said the International Monetary Fund, the 16 eurozone nations and the European Commission will be involved. Britain, Sweden and Denmark will offer bilateral loans.

The statement says the average interest rate Ireland will is 5.8 percent. This total reflects higher rates to be charged by EU sources, and lower rates from IMF and national donors.

Greece is paying 5.2 percent interest on its own bailout from May. Ireland's aid package includes loans that range from 3 to 7 1/2 years, longer than the Greeks' three-year deal.

The European Commission also granted Ireland an extra year to bring down its deficit to within the EU limit of 3 percent of GDP. It will now have until 2015, compared with 2014 previously.